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Tag: strategic management

Strategic Management – A Simple Guide

by Matthew Booth
Strategic Management – A Simple Guide

Strategic Planning and Management – A Simple Guide

David King, CEO, Eastern Australia and NZ, is a Newcastle-based CFO with extensive experience in a variety of industries, including manufacturing, industrial, property and professional services. Here at The CFO Centre, we interviewed David and tapped into his knowledge on Strategic Management…

What is the definition of “Strategic Management”?

It’s a process that allows the business owner or manager to clarify their purpose, their goals and their vision, from which a Strategic Plan (sometimes called a Business Plan or Business Strategy) can be formulated and implemented. The on-going monitoring and tweaking of the Plan gives the business the best chance of delivering on the owner’s long-term goals and Vision.

Strategic Management is not about trying to predict the future, there’s no crystal ball! Rather it’s about preparing for the future and knowing the steps the business will have to take to achieve its goals and objectives and to remain competitive.

What is the difference between Strategic Management and Strategic Planning?

Both terms are used interchangeably. I personally prefer the reference ‘Strategic Management’ as it encapsulates the on-going implementation and evaluation process. This is vital, rather than just the planning stage itself.

Strategic Management or Planning answers the key questions:

  • Where is the organisation at the moment? (The SWOT analysis – strengths, weaknesses, opportunities and threats – is useful here)
  • Where does the owner want to go? (Purpose, Vision and Goals)
  • What does the business need to look like to support the above?
  • How can the company get to this point? (Consider the long term strategic plan)

Why is Strategic Management important to all business owners?

From my own experience in the business environment, and from the clients we work with, I know how easy it is to get “stuck in the trenches” with the day-to-day operational stuff. Business owners have so many balls to juggle that time and focus for strategic management may never be made.

However this is the reason why strategic management is so important. It enables the business to evolve and strengthen. So the owner and/or managers can focus on the things that really matter and put steps in place to make the business less reliant on them for lots of the “other stuff”. Long-term success rarely happens without sound planning and execution. Whether that’s to grow, sell or pass the business to the next generation.

What are the factors which are involved?

There are typically five stages in the Strategic Management process which involve utilising a balanced scorecard:

  •         Clarify your Purpose, Vision and Goals
  •         Gather and analyse information – both internal and external
  •         Formulate a Strategy (and KPIs)
  •         Implement Your Strategy – Asking questions like what, who or when.
  •         Monitor and evaluate – remain agile.

Do you have any tips or insights for owners / managers for introducing strategic analysis into their business?

I suggest that an external facilitator is used in the process. They can guide the owner / managers, keep them accountable, challenge them, and assist in the formulation of the Strategic Plan. For example, our CFO’s within The CFO Centre assist our clients with the Strategic Management process from which financial forecasts and KPI’s can be set and monitored.  We often hear our clients talk of the comfort and motivation that comes from the strategic clarity unlocked by the process!

Whilst it’s a good thing to challenge ourselves and evolve, make sure the Strategic Plan is achievable and realistic with clear action steps and time-frames. Ensure the available resources (people, funding, systems etc) can deliver on the Strategic Plan, or that the Plan includes steps to bolstering the necessary resources.

Monitoring progress against the Strategic Plan, and tweaking the Plan when necessary, is really important. The last thing you want is to see the Plan gather dust on a shelf and not be a key document in the running of the business. 

At The CFO Centre we often introduce and chair the monthly management meeting for our clients. We cover the strategic, financial and operational matters of the business. Our clients find it an effective way to keep on track. Their part-time CFO advises on how the execution of the Strategic Plan translates into financial performance.

Lastly, I encourage business owners and managers to make the time for Strategic Management as it will pay dividends (figuratively and literally). One must be open to the process and enjoy the journey!

Tell Me Why I Need A Part Time CFO

by lauramills
Tell Me Why I Need A Part Time CFO

You are the owner or CEO of a medium size business. You already have an in-house accountant and an external public accountant. Why might you need another finance person?

Here are 8 reasons why a part-time CFO will be beneficial to your business:

  1. DIFFERENT (BUT COMPLEMENTARY) AREAS OF EXPERTISE

CFOs will normally have substantial hands-on commercial business experience (see point 3 below). Accountants are more skilled in their areas of expertise, but typically don’t have that depth of hands-on operational commercial experience. The skill sets are different, but complementary. The three finance professionals, working together as a team, can produce substantial benefits.

 

  1. BETTER INFORMATION

You need good information to make good business decisions. For example:

  • FORWARD LOOKING reports, such as cash flows and order/sales forecasts
  • NON FINANCIAL information such as key operational KPIs
  • Customer, territory, sales channel, service and product profitability
  • More frequent high-level timely reporting on key business indicators i.e. the weekly dashboard

CFOs can provide business intelligence reporting, specific to that unique business’s characteristics and challenges. They are generally more experienced at   “management accounting” i.e. providing the right information which management need to run the business. Management accounting is very different from what the tax accountant uses, or what generic software P&L reports provide.

 

  1. COMMERCIAL SKILLSET

Most CFOs are professionally trained accountants, who then move to commercial roles. Normally it would take at least another 10 years of commercial experience to become a CFO. In these corporate roles, CFOs often partner with the CEO as their right-hand person, thus acquiring extensive commercial and operational experience. They often have project management, IT, risk management, internal controls/processes and administration experience.

 

  1. BENEFITS FOR THE OWNER or CEO:

 The part-time CFOs:

  • Can focus on finance, admin, and IT thus freeing up the CEO to focus on the business
  • Pass on best practices and techniques learnt in corporates
  • Be a sounding board, mentor and advisor
  • Be a long-term relationship-based partner who takes the time to really know the business
  • WORK WITH OWNER/CEO TO ACHIEVE THEIR GOALS AND AMBITIONS

 

  1. FLEXIBLE CUSTOMISED ENGAGEMENT

  • You pay for the level of engagement that you need, in contrast to the fixed high costs of a full-time CFO
  • Both retainer and time spent fee structures are available

 

  1. HIRE ONE, ……TAP INTO THE NETWORK

The CFO Centre has over 750 CFOs. When you engage with a CFO from The CFO Centre, you can effectively tap into this global network which has in excess of 10,000 years of experience and knowledge.

 

  1. IMPROVED STAKEHOLDER CONFIDENCE

The CFO Centre are the global number 1 provider of part-time CFOs, Hiring a part-time CFO from The CFO Centre will give banks, suppliers and other partners added confidence to deal with the company.

 

  1. VALUE FOR MONEY

Take advantage of experienced commercial professional, on a flexible structure determined by the client, at a fraction of the cost of a full time CFO.

 

SUMMARY

For SMEs who have grown in size and complexity, but not yet reached a size where a full-time CFO is required, the “part-time”, or  “on-demand” CFO could be the solution.

Written by Gary Campbell. Gary is a CFO with The CFO Centre in Victoria, Australia. He is particularly successful at profit improvement, financial turnarounds, reporting and risk management within manufacturing and distribution sectors. He can be contacted at [email protected], or you can contact us here

How A Strategic Plan Will Change Your Business

by lauramills
How A Strategic Plan Will Change Your Business

Strategic Planning is the key to the success of any business, no matter its size or age but it’s said that many small to medium-sized businesses don’t have a plan of any kind.

What is a Strategic Plan?

The strategic plan sets out:

  • the company’s direction and priorities;
  • its main operating and financial targets,
  • the actions it will take to achieve those objectives,
  • the new initiatives and investments planned, and
  • their impact on the company’s performance.

Nearly a fifth of SMEs say they prefer to keep plans in their head, according to research by Close Brothers Asset Finance. Mike Randall, CEO of Close Brothers Asset Finance, says, “It’s concerning that so many small and medium sized firms do not have a strategic business plan.  Without clear direction, they may be missing out on opportunities for growth and not realising their full potential.”

A formal plan is an extremely valuable tool for managing and growing a business as it:

  • clearly communicates the company’s priorities
  • ensures all key staff are working towards common goals
  • sets the focus on key objectives
  • delegates actions and accountabilities amongst employees
  • ensures that decisions made will benefit the long-term company goals
  • allows a company to recognise its strengths and weaknesses.

Failing to plan is like planning to fail

Strategic Planning is an area SMEs should be focusing on.   Furthermore, a plan is only useful if it is reviewed regularly to ensure it meets the current and future needs of the business.  It’s vital business owners regularly review their financial strategy to ensure they have the right funding in place to meet the needs of their business, at its current stage of the business lifecycle.

Most CEOs and MDs simply don’t have the time to spend on quality strategic thinking and to document and communicate that thinking in a way which allows the whole business to buy into the vision. Harder still is managing and implementing the business plan. Significant strategic course corrections are commonplace in fast-growing companies. These should be embraced. The tricky part though is in managing regular change. That requires a combination of time and specialist knowledge.

There is an art and science to effective business planning. Getting it right brings a real sense of clarity and direction to a business. This is where an experienced part-time CFO can make a significant contribution.

There is an art and science to effective strategic planning. Getting it right brings a real sense of clarity and direction to a business.

Business Plan for Funding

It’s likely at some point in your business journey, that you need access to funding. Whether that be to scale faster, expand into other territories or buy other businesses.

External funding could be via banks, non-bank lenders, venture capitalists, and angel investors.  None of these are unlikely to look at any funding request that isn’t accompanied by a very solid business plan.  It defines exactly what you want to achieve, and how you plan to achieve it across a set time period. It’s a sure-fire way to ensure that growth targets and plans are being met.

However, business owners will struggle to formulate a concrete business plan without firstly ensuring that their strategic plan is solid and robust.

Our team can assist in creating and implementing a solid strategic plan and/or business plan that paves the journey for your business. Click here to find out more, or contact us on 1300 447 740.